Spectra Energy to buy Express-Platte pipeline system for $1.49 billion

Tue Dec 11, 2012 9:14am EST
 
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(Reuters) - Spectra Energy Corp SE.N said it will spend $1.49 billion to buy the Express-Platte System, one of the three major pipelines that move crude oil from Western Canada to refineries in the Rocky Mountain and Midwest regions in the United States.

The purchase, which comprises $1.25 billion in cash and $240 million in debt, will give Spectra a foothold in the rapidly expanding North American crude oil pipeline market.

Canada has only three major pipelines that take conventional and oil sands crude into the Midwest, and fears are mounting that the export of Canadian crude will be constrained due to pipeline project delays, even as production burgeons.

The Express pipeline takes up to 280,000 barrels per day (bpd) of crude oil from Hardisty, Alberta to U.S. refining markets in Montana and Wyoming. The smaller Platte line carries about 164,000 bpd from Guernsey, Wyoming to Wood River, Illinois.

The transaction is expected to immediately add 3 to 5 cents per share to Spectra Energy's full-year earnings, the company said in a statement.

The Ontario Teachers' Pension Plan, Borealis Infrastructure, and pipeline operator Kinder Morgan Energy Partners KMP.N each held a one-third stake in the Express-Platte pipeline system.

Kinder Morgan will get $380 million before tax from the sale of its interest in the pipeline, while Ontario Teachers' Pension Plan and Borealis Infrastructure will get $430 million each.

(Reporting by Swetha Gopinath in Bangalore; Editing by Supriya Kurane)